12.7.11

M.U.D. board approves 2012 budget with no rate increase

The Metropolitan Utilities District (M.U.D.) board today approved a $430 million operating budget for 2012, which includes $24 million for infrastructure replacement projects. Directors approved the budget with no natural gas or water rate increases to current customers. The District's natural gas and water rates remain below the national average and comparable to other utilities in the Midwest.

In the face of large capital requirements, declining consumption and rising expenses, the District began a multi-year program to aggressively manage expenses through cost control measures and to appropriately generate new revenues where possible.

“These efforts allow the District to forgo any rate increases to our customers at this time,” said Dave Friend, M.U.D. board chair.

"We continue to look at further opportunities to reduce expenses as a critical component of our ongoing management," said Deb Schneider, senior vice president and chief financial officer. "We strive to find a balance between rate increases and expense management while ensuring that we provide our customer-owners with safe, reliable and economical natural gas and water service."

The District has implemented a cost management plan to evaluate and manage all controllable expenses, including: wage freezes; continued evaluation of the need to fill open positions and streamlining business processes for efficiency. In addition, future collective bargaining negotiations will be aimed at further expense reductions and addressing the District’s ongoing cost of employee benefits.

Larger expense reduction items include removal of a $15 million construction and operations center and a $4 million administration center from the capital plan.

In 2008, the District formally began a program to replace aging water and gas infrastructure to coincide with the City of Omaha’s Combined Sewer Overflow project.  The District’s program is expected to exceed $1 billion and span several decades with an eventual target of replacing 20 miles of mains a year.

“The construction center delay was partially made possible after the board gave management the authority to subcontract a portion of the natural gas infrastructure upgrade. This is expected to result in savings of $3 million annually once the program is fully ramped up with qualified subcontractors in place,” Schneider said.

In the future, the District plans to issue bonds to fund capital improvement projects required to meet more stringent water quality regulations and to upgrade the Florence Water Treatment Plant. ““The District should be in good financial position to approach the bond market in 2012. We believe this will save our customer-owners in the long-term.” Schneider said.

The District also will look at ways to spread costs through new revenue channels. Natural gas is taking hold in the U.S. as a domestic, clean and economical choice for transportation.

“We are now recognized as industry leaders and being on the forefront of this national movement allows us to generate additional revenue and bring real fuel-cost savings to our ratepayers,” said Mike McGowan, board vice-chairman.

The District provides safe drinking water to more than 201,800 customer-owners in Omaha, Bellevue, Bennington, Carter Lake, La Vista, Ralston, Waterloo and the Papio-Missouri Natural Resources District (which supplies water to Fort Calhoun). In addition, the District is the fifth largest public gas utility in the United States, serving natural gas to 216,826 customer-owners in Omaha, Bennington, Fort Calhoun, Springfield, Yutan and 85 percent of Bellevue.

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